Chapter VI Money — Our Greatest Problem

practice of printing gold and silver certificates. This was not a thing of value, not a product of labour in the truest sense of the word, but a phoney "gold" and "silver" dollar added by the Government to swell the volume of money. It proved to be a wise thing to do under existing conditions; and since it was done by the Government for the people it was an act of the people, and immediately on the certificates being paid out to customers of the banks, and paid for products of labour, they became earned dollars. But when private banks, then National Banks, then Reserve Banks began to flood the country with private I.O.U.s, the earned dollar dropped into a very minor role in the money markets of the world. The earned dollar was just used for pocket and cash register change. Had the government retained control of money and credit, and issued all paper money, and added all deposit credits on the books of the banks, limiting bankers — money lenders to the lending of the actual deposit credits they had in their own banks, together with such deposit credits as customers of the banks might have subrogated to them (as time deposits) no harm would have been done; but when the Reserve Act made corporation stock basis of bank reserves, which in turn became the source of bank credit, which was loaned to customers and thereby transformed into deposits, transferable by cheque with which customers of banks made over 90 percent of their monetary payments, the phoney dollar, the unearned dollar practically crowded the earned dollar out of the picture, and bankers were given the power of life and death over every person in the United States, by extending or withholding credit. Producers of the material things people want and buy, together with those who serve others for hire, came up with their earned dollar, which amounted to a few billions, while the bankers shoved into the volume of money trillions of phoney dollars, which have competed with the earned dollar in the markets of the world. It reduced the earned dollar's buying power almost to nothing, and left the producer forced to continually fight for more pay that he might meet the high prices the phoney dollar has forced the sellers to demand. Many definitions of money have been